In an effort to have a more serious discussion about this point, I'm going to list the titles on PSP and PS3 which have sold over 500k in Japan (million plus sellers bolded):
Yes, the situation is that sad.
PSP didn't really need 500k sellers to keep the system alive, and I mean alive and not doing sub 10k which is what the Vita will be doing soon. The bigger problems are price and perception and that's why Vita is pretty much fucked because when the hardware is expensive you are always cutting potential software sales. And if the software isn't selling the hardware will take a hit. Nintendo knew MH, MK7 and SML3D wouldn't be selling this good if they hadn't drop the price.
Between PSP and DS there was only a ~3000Y difference but this time Sony though they could get away with ~10000/15000Y more. And they probably would've get away with a 25000Y base price if they had locked MH or 19000Y with no MH, but no MH and 25000Y + memory card as the cheapest SKU when the competition costs 15000Y was a strategy destined to fail.
I know the huge 3DS pricedrop probably took Sony by surprise but after what happened with the PS3vsWii and PSPvsDS Sony should've learned and never planned to develop a much more expensive handheld compared to other typical Nintendo handhelds. I mean, they are late, they are much more expensive and they have zero potential big games on the horizon. Someone should get fired.